5/11/2012

24 Of Warren Buffett’s Most Wanted Dividend Stocks

Investment Targets Of Warren Buffett Researched By Dividend Yield - Stock, Capital, Investment. Warren Buffett is an American
investor, Chairman and CEO of Berkshire Hathaway. He is the third richest man in
the world in accordance to Forbes and one of the most influential people in the
world. The investor generates nearly USD 1 billion in free cash flow per month and
has additional USD 37.8 billion in cash for takeover projects. As of Q4/2011, Warren's portfolio had a worth of USD 66.15 billion.

Recently, Bloomberg analyst's made a screen of stocks with some classical Buffett target-criteria:

- Market Capitalization from $20 Billion to $40 Billion

- Capital Expenditures / Net Fixed Assets > 10%

- 5-Year Average Growth in ROIC in Highest 50%

- 5-Year Average Operating Cash Flow Growth in Highest 50%

- P/E Ratio < Average Company Value in Home Market

24 companies worldwide remained of which 14 are U.S. listed. Four of the
results have a yield over three percent and twelve are currently recommended to
buy.

Deere & Company (NYSE:DE) has a market capitalization of $31.73 billion. The company employs 61,300 people, generates revenues of $32,012.50 million and has a net income of $2,799.20 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $5,903.20 million. Because of these figures, the EBITDA margin is 18.44 percent (operating margin 13.19 percent and the net profit margin finally 8.74 percent).

Financial Analysis:
The total debt representing 55.16 percent of the company’s assets and the total debt in relation to the equity amounts to 391.01 percent. Due to the financial situation, a return on equity of 42.76 percent was realized. Twelve trailing months earnings per share reached a value of $6.73. Last fiscal year, the company paid $1.52 in form of dividends to shareholders.

Long-Term Dividends History of Deere & Company (DE) (Click to enlarge)

Long-Term Dividend Yield History of Deere & Company (NYSE: DE) (Click to enlarge)

Tyco International (NYSE:TYC) has a market capitalization of $25.49 billion. The company employs 100,000 people, generates revenues of $17,355.00 million and has a net income of $1,567.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3,437.00 million. Because of these figures, the EBITDA margin is 19.80 percent (operating margin 12.21 percent and the net profit margin finally 9.03 percent).

Financial Analysis:
The total debt representing 15.49 percent of the company’s assets and the total debt in relation to the equity amounts to 29.25 percent. Due to the financial situation, a return on equity of 11.07 percent was realized. Twelve trailing months earnings per share reached a value of $3.02. Last fiscal year, the company paid $0.99 in form of dividends to shareholders.

Long-Term Stock History Chart Of Tyco International Ltd. (Click to enlarge)

Long-Term Dividends History of Tyco International Ltd. (TYC) (Click to enlarge)

Long-Term Dividend Yield History of Tyco International Ltd. (NYSE: TYC) (Click to enlarge)

McKesson Corporation (NYSE:MCK) has a market capitalization of $21.12 billion. The company employs 37,700 people, generates revenues of $122,734.00 million and has a net income of $1,403.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2,474.00 million. Because of these figures, the EBITDA margin is 2.02 percent (operating margin 1.75 percent and the net profit margin finally 1.14 percent).

Financial Analysis:
The total debt representing 12.03 percent of the company’s assets and the total debt in relation to the equity amounts to 58.26 percent. Due to the financial situation, a return on equity of 19.97 percent was realized. Twelve trailing months earnings per share reached a value of $5.60. Last fiscal year, the company paid $0.80 in form of dividends to shareholders.

Take a closer look at the full table of Warren Buffett's most wanted takeover targets. The average price to earnings
ratio (P/E ratio) amounts to 16.18 and forward P/E ratio is 10.55. The dividend
yield has a value of 2.11 percent. Price to book ratio is 2.50 and price to
sales ratio 2.16. The operating margin amounts to 24.11 percent.

Here is the full table with
some fundamentals of the U.S. listed stocks (TTM):

Dividend Yield Passive Income Portfolio Holdings

What is a dividend? A dividend is a payment by the company to its shareholders. Normally, a stock pays 4 times a year a quarter dividend in order to participate investors at the company’s success. The amount of dividends in relation to the earnings of a company is called payout ratio. The figure measures the part of the earned money which is paid to the shareholders. A payout ratio of up to 50 percent (half of it's earnings) is a good figure. Sometimes it could be possible that companies can pay 90 percent of its net income due to its business model. Those businesses don’t need much money for growing.

The dividend amount in relation to the price that an investor pays is called the dividend yield. The value measures the return of the investor. A dividend yield of 5 percent (High-Yield) means that the investor receives 5 percent of his investment in cash - pretax within a year. This value is estimated for the full year dividends. Most of the highest yielding dividend stocks have only a big quarter dividend of more than one percent because of it's unsustainable dividends. The capital market expects a dividend dividend cut by the company.

An important date for investors is the ex-dividend date. This is the day on which the new investor doesn’t receive any dividend payments. He must wait 3 month for the next quarter dividend.

By Dividend Yield - Stock, Capital, Investment

What is a Stock? Stocks (also called stock or share) are part of the capital stock of a company. It represents the original equity paid into the company. The capital stock could be traded at well-known stock markets like the New York Stock Exchange (NYSE) or NASDAQ.Every stock or share represents a partition ownership to the company. A stock owner has the ability to receive dividends and has a voting right for the annual general meeting (AGM). The stock owner participates on the business opportunities and risks.

There are two main stock types available: common stock and preferred stock. A common stock gives the shareowner the ability to vote at the annual general meeting and to receive dividends. A preferred stock has no voting right but for compensation, a higher claim for earnings and assets.

By Dividend Yield - Stock, Capital, Investment

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